Sentiment also took a hit after the fiscal deficit target for 2017-18 was raised to 3.5 per cent of GDP as against 3.2 per cent earlier.

The target for 2018-19 has been fixed at 3.3 per cent as against the Fiscal Responsibility and Budget Management Act target of 3 per cent.

Markets reeled under heavy selling pressure, but large- scale buying by domestic institutional investors towards the later part of the session blunted the impact.

The BSE Sensex started on an optimistic note at 36,048.99 and advanced to 36,256.83 points during the presentation of the Budget but turned negative after Jaitley announced long term capital gains tax, hitting a low of 35,501.74.

However, it bounced back to close at 35,906.66, still down 58.36 points, or 0.16 per cent.

The NSE Nifty too saw volatility and ended at 11,016.90, down 10.80 points, or 0.10 per cent. It hovered between 11,117.35 and 10,878.80 during the day.